Innovation is under scrutiny in the financial services world as global competitive pressures force organizations to rethink their business models and operating environments. A changing landscape sees the profiles of clientele changing too and banks need to ask themselves what kind of people their up and coming clients are.
The intense focus on meaning-making in society, coupled with the exponentially evolutionary nature of social systems and networking capabilities means the new generation has different needs to their predecessors. Money systems of the past are no longer adequate to deal with the requirements of current users, they demand individual attention, packages that suit their lifestyles, banks that provide an identity rather than a deposit box, and above all this new and connected generation wants a reason to use the services provided by a single out of many.
Banking and money lending may seem a straightforward affair, and indeed the concept behind money keeping, borrowing and lending is undemanding, so how does a financial services institution innovate radically with the goal to grow and keep with the fast paced nature of the landscape around it? Ecosystem and ecogenetic thinking suggest that everything is linked, and what we have begun to see is a rise in banking activities correlated to other societal shifts. Zopa, operating out of the UK, was one of the first peer-to-peer online money lending platforms, born out of the socially networked behavior of people; this type of lending negates more traditional modes of lending through a financial institution such as a bank.
In Bangladesh, Muhammad Yunus founded the Grameen Bank and in 2006 was awarded the Nobel Prize for Peace. The bank, in an attempt to provide a community service, allows its clients to take out small loans called microcredit which require no collateral, enabling the poor members of the Bangladeshi society to develop financially. The social behavior of society and the nature of systems of peer-pressure effectively allow this bank to exist by only lending to the poor.
Systems of monetary exchange are shifting, and it is obvious that insightful innovation implemented in the correct way may see a bank truly thrive, but how is this innovation achieved?